Saudi Aramco said to weigh rolling bank hires for record IPO

DUBAI (Bloomberg) -- Saudi Arabian Oil Co. is weighing a plan to hire investment banks for different stages of its initial public offering, four people with knowledge of the matter said.

The company is talking to banks for a role as financial adviser to review potential listing destinations and prepare the company for the float, the people said, asking not to be identified as the talks are private. Banks that do well in that role will then be considered for subsequent stages including underwriting, the people said. Aramco may re-tender the work if they’re unhappy with a bank’s performance, they said.

No final decisions have been made on the advisory roles, though Aramco is expected to mandate banks in coming days, the people said.

Aramco asked banks including Goldman Sachs Group Inc. and HSBC Holdings Plc to pitch for the advisory role on the IPO, people familiar with the matter said in January. Credit Suisse Group AG, Morgan Stanley, Citigroup Inc. and JPMorgan Chase & Co were also invited, the people said. Evercore Partners Inc. has already been hired to work alongside rival Moelis & Co. as a financial adviser on the listing, people familiar with the matter said earlier this month.

Once banks are mandated for an IPO they typically continue working on it until the point a company lists, though staggered mandates could incentivize the banks as they compete for coveted roles. When Chinese Internet retailer Alibaba Group Holding Ltd. sold shares in 2014, it awarded about 17% of the deal’s $300 million in fees to banks based on performance, people familiar said at the time. Its sale is the largest ever, raising $25 billion.

Saudi Arabia plans to sell less than 5% of the company as part of plans by Deputy Crown Prince Mohammed bin Salman to set up the world’s biggest sovereign wealth fund and reduce the economy’s reliance on hydrocarbons. The kingdom estimates the company could be valued at about $2 trillion, with the share sale expected to dwarf Alibaba’s.

Aramco declined to comment.